GST won’t change but the online threshold may drop

Conservative-led states have urged the new government to lower the threshold for online goods and services purchases from $1000 when it is cost-effective, as finances come under increased pressure.

South Australia’s Liberal shadow treasurer,
Iain Evans
, who is waiting to see the federal Treasury working group’s analysis on the issue, said that while the federal Coalition had ruled out changing the GST, the online threshold should be considered as an option when it was cost-effective.

“The federal government has ruled out changing the GST," Mr Evans told The Australian Financial Review, adding that, concerning the online threshold, “if it can be done cost-effectively, then it is something that should be considered".

The working group is understood to have made findings along similar lines to a Productivity Commission report that said lowering the threshold would cost more to administer than it would raise. The Coalition has committed to a tax review, including the GST, but ruled out any change to the base or the rate, at least for this first term.

Standard & Poor’s said on Monday that the broader GST would fall short of official Treasury estimates by more than $4 billion in the next three years as households spend an increasing amount of their incomes on items exempt from the tax and as consumer spending weakens.

“Overseas online purchases are a growing part of our retail market," NSW Treasurer
Mike Baird
told the Financial Review. “I would argue strongly that there is a clear choice between modernising our tax system to provide a level playing field for our local retailers and burying our heads in the sand.

“At a time when we are facing a collapse in GST revenue across the country, the suggestion that states and territories could be missing out on more than $2.5 billion in revenue over the next few years is a huge concern," he said.

“Clearly, it is possible and it’s time for us to get on and close the low-value threshold loophole so that local businesses can create more jobs, and the states can get on with providing the services that our communities expect and deserve."